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Judge OKs Settlement In Yahoo Shareholder Suit

ScuttleMonkey posted more than 5 years ago | from the play-nice dept.

Yahoo! 40

narramissic writes "On Friday, Judge William Chandler III of the Delaware Court of Chancery approved a settlement that will roll back a Yahoo employee severance that was implemented by Yahoo's former leaders. Some investors, including the vocal Carl Icahn, described the plan as a poison pill, arguing that the severance payouts would be so expensive that no company would want to acquire Yahoo. The settlement narrows the reasons why employees can quit and receive the severance, removing some of the incentives for them to leave the company in the event of a Yahoo acquisition, whether by Microsoft or some other suitor."

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40 comments

And In Other News... (3, Funny)

MightyMartian (840721) | more than 5 years ago | (#27127317)

And in other news, Yahoo slips further into irrelevance.

Re:And In Other News... (4, Funny)

Samschnooks (1415697) | more than 5 years ago | (#27127379)

And in other news, Yahoo slips further into irrelevance.

Yeah, I haven't seen anyone drinking that. At least where I live, people prefer to drink Coke.

Re:And In Other News... (1)

davidsyes (765062) | more than 5 years ago | (#27128899)

Instead of poison pills, companies wanting more regularized control of their "acquisition" should create "laxatives".

Then, instead of slipping into irrelevance, they can slip more regulated. They could try Prune Juice (Or, in poolitically correct California, "dried plums", hehehehe).

Butt, in any case, an exturnal endsqishsition boosted by a sooper assisted asscquisition would be a massy undertaking... umm... proposition...

Butt, thin a again, newly set up companies should set up high merger-buyout pills in the event of hostile take-over, with "relaxed" terms (therms?) for friendly buyouts. If at least 30% of the company opposes the buyout...

At the very least, if it's not to be all "cookies and cream", make it "poopies and screams"...
(captcha: "darken")

Re:And In Other News... (-1, Offtopic)

cayenne8 (626475) | more than 5 years ago | (#27127501)

...well, still, I don't think this is quite as bad as the new plan in congress...to allow judges to interfere with legal, agreed upon contracts. This law to allow judges to step in, and arbitrarily tell a bank/mortgage company they MUST re-adjust the loan for less interest, and/or lower principal of what a home is now worth...sets a precedent that is MUCH further reaching than just 'saving' a home owner.

And by the way...when did people get so squeamish about being 'under water' or upside down in a loan? Anyone who has purchased a new car, has done this the second they drove the car off the lot. You don't sweat it, 'cause a car is something you keep awhile to use. What is different about a house/home?

Still...either way...I'm getting very jumpy about judges messing with legal agreements.

Re:And In Other News... (5, Informative)

Ninnle Labs, LLC (1486095) | more than 5 years ago | (#27127583)

Still...either way...I'm getting very jumpy about judges messing with legal agreements.

Why? They've been doing it for hundreds and hundreds of years in the common law tradition.

Re:And In Other News... (0)

Anonymous Coward | more than 5 years ago | (#27130785)

When the mortgage loans were made, the lenders knew that the house was collateral in the event of default and that bankruptcy couldn't change this fact. As a result, mortgages were secured loans and had much lower interest rates than unsecured loans (such as credit card loans). Unfortunately, making mortgages act more like unsecured loans will likely result in increased rates for homebuyers with good credit and may make it even harder for homebuyers with moderate or poorer credit to get a loan at all.

Until we have more details, it's hard to tell how bad the impact of cram downs will be.

Re:And In Other News... (1)

MightyMartian (840721) | more than 5 years ago | (#27127595)

Wow, that was so off-topic I think it gave me cancer!

Re:And In Other News... (1)

maxume (22995) | more than 5 years ago | (#27128337)

You can treat that kind of cancer with M&M's.

Re:And In Other News... (1)

elrous0 (869638) | more than 5 years ago | (#27134371)

For the hundredth time, Gary, bloody stools DO NOT necessarily mean you "have cancer."

Re:And In Other News... (1)

interkin3tic (1469267) | more than 5 years ago | (#27127713)

when did people get so squeamish about being 'under water' or upside down in a loan

When the loan is from the mafia. That's when I'm afraid of being underwater from a loan.

I really need to change some wording. (4, Insightful)

Samschnooks (1415697) | more than 5 years ago | (#27127325)

"We are very pleased that the settlement was approved because we believe it is in the best interests of the company and our shareholders," the company said in a statement.

I think it really means:

"We are very pleased that the settlement was approved because we believe it is in the best interests of the executives and maybe our shareholders," the company said in a statement.

Yeah, I'm a cynical old bastard, but can you blame after what's happened in the last six months?

Re:I really need to change some wording. (2)

Trojan35 (910785) | more than 5 years ago | (#27127835)

Maybe? It's definitely in the best interest of the shareholders. Unless you think all of Yahoo's top talent will now leave for the millions of lucrative tech jobs around the bay. Wait a minute...

Re:I really need to change some wording. (1)

mehtars (655511) | more than 5 years ago | (#27127875)

Actually, with the current conditions of the market, the best case would have been to sell to microsoft . This makes any sale easier.

Re:I really need to change some wording. (1)

hairyfeet (841228) | more than 5 years ago | (#27128609)

Sure, if you want the company destroyed. If that is the case why not just burn the buildings for the insurance? Seriously MSFT Search sucks. Hotmail before MSFT touched it was okay. After? Giant pile o' suck. I use Yahoo Search and love my Yahoo mail. If MSFT gets a hold of it I will turn my Yahoo accounts into spam dumps and switch back to Google. Why? Because 6 months or less after MSFT gets their hands on it Yahoo will be rebranded as "Yahoo Web Live 2.0 With Extra Vista Goodeness!" And just like MSN Search it will give you 5000 ads and searches trying to sell you crap that has NOTHING whatsoever to do with what you actually typed into the search field.

Seriously, if you want the company dead THAT damned bad, burn it for the insurance. It would be a better fate than letting MSFT fuck it up. They have NEVER done web Anything that didn't suck. Yahoo will not change that. And if I worked for Yahoo and MSFT bought it, bad economy or not, I would be out looking for a new job. Nobody will want their name associated with the crapfest that MSFT will turn Yahoo into. Right now they are a comfortable #2 in Search, and last I checked #1 in webmail. Sell to MSFT and it will hit the basement so quick it'll actually make Ask.com look good again. There is simply nothing going on at MSFT ATM except failure and marketing BS. Sell Yahoo to MSFT and in 6 months it will stink like Vista. As a user, no thanks, I'll just go to Google and the shareholders can go piss up a rope. Windows Live Search is just too damned awful for words, and you want to let THOSE monkeys loose on Yahoo? What are you nuts?

second post (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#27127331)

I just took a #2 if anyone is hungry

Re:second post (-1, Troll)

Anonymous Coward | more than 5 years ago | (#27127465)

Did you drop a baby obama in the toilet?

Re:second post (0)

Anonymous Coward | more than 5 years ago | (#27127647)

Yeah, but in honor of Bill Clinton, I used the sink.

Nobody wants... (0)

Anonymous Coward | more than 5 years ago | (#27127337)

Nobody sane would aquire Yahoo in this sort of market. Especially after the stubborness they demonstrated when Windows was interested. Yahoo will continue to dwindle in value and relevance as it has done for the last couple years.

Re:Nobody wants... (1, Funny)

MightyMartian (840721) | more than 5 years ago | (#27127639)

Relax. In a year, Yahoo will be like Circuit City, and if you show up early enough at the Big Closeout Event, you'll be able to buy the "You've Got Mail" wave file, along with toilet paper rolls and the portrait of Jerry Yang that he used to whack off to in his private bathroom.

+1...BOO Circuit City...BOO... (0)

Anonymous Coward | more than 5 years ago | (#27128393)

FUCK Circuit City. Their thieving ways, spreading of lies, and consistent failure to their employees and customers is further proof of WHY a retailer must support good customer service. They wonder why their customers left them--blaming it on "poor consumer confidence"--when it was because people finally grew tired of having extended warranties and outrageously priced services crammed down their throats. GOOD RIDDANCE.

Re:Nobody wants... (0, Troll)

Thinboy00 (1190815) | more than 5 years ago | (#27128601)

Relax. In a year, Yahoo will be like Circuit City, and if you show up early enough at the Big Closeout Event, you'll be able to buy the "You've Got Mail" wave file, along with toilet paper rolls and the portrait of Jerry Yang that he used to whack off to in his private bathroom.

I thought "You've got mail" was AOL.

And what idiot decided that was troll?

Re:Nobody wants... (0)

Anonymous Coward | more than 5 years ago | (#27127659)

Especially after the stubborness they demonstrated when Windows was interested.
they demonstrated when Windows was interested.
Windows was interested.
Windows

Re:Nobody wants... (0)

Anonymous Coward | more than 5 years ago | (#27141563)

ZOOMAN on /.

That's a paddling.

Poison Pill (1)

BigGar' (411008) | more than 5 years ago | (#27127391)

I was thinking that these severance agreements were supposed to be a poison pill to discourage a corporate take over.

Times they are a changin'.

Re:Poison Pill (2, Insightful)

Ninnle Labs, LLC (1486095) | more than 5 years ago | (#27127493)

Carl Icahn didn't want to discourage a takeover. That's the whole reason he's pissing in his diapers.

"vocal investor" vs "corporate raider" (5, Insightful)

rbanffy (584143) | more than 5 years ago | (#27127395)

I must congratulate the P.R. team behind Icahn. The press keeps calling him "activist investor" when "corporate raider" would be a far more appropriate term...

Re:"vocal investor" vs "corporate raider" (2, Insightful)

Samschnooks (1415697) | more than 5 years ago | (#27127541)

I must congratulate the P.R. team behind Icahn. The press keeps calling him "activist investor" when "corporate raider" would be a far more appropriate term...

It does sound better, but from a shareholder perspective, those raiders are a benefit. Unfortunately, corporate management very rarely works in the best interests of the stockholder and trying to get them fired is pretty much impossible without buying the company outright. Even the mutual fund that may have millions of shares in a particular company will have maybe a one percent of voting power. The stockholder almost always loses when management gets their way.

Re:"vocal investor" vs "corporate raider" (4, Insightful)

Dhalka226 (559740) | more than 5 years ago | (#27127837)

Unfortunately, corporate management very rarely works in the best interests of the stockholder and trying to get them fired is pretty much impossible without buying the company outright.

All Icahn wants is to have the company sold. By that logic, whoever buys it would be just as likely to not work in the best interests of the stockholder and their only recourse will be to try to get the company sold. Over and over and over ad nauseum.

Boon to stockholders? Probably. Then again I think we're living with the consequences of pretending money comes out of thin air to reward people for something that doesn't actually change anything. Things can appreciate, but not instantly, not merely on speculation, and not just because the stockholders would like some quick cash please.

Re:"vocal investor" vs "corporate raider" (4, Insightful)

Mr. Underbridge (666784) | more than 5 years ago | (#27127845)

It does sound better, but from a shareholder perspective, those raiders are a benefit. Unfortunately, corporate management very rarely works in the best interests of the stockholder and trying to get them fired is pretty much impossible without buying the company outright. Even the mutual fund that may have millions of shares in a particular company will have maybe a one percent of voting power. The stockholder almost always loses when management gets their way.

That depends strongly on what time horizon you evaluate the shareholder perspective. Your average shareholder would like nothing more than for management to operate the company like a big pump-n-dump machine, jacking up the stock price for the next two quarters at the expense of long-term profitability. If management's doing its job correctly, it won't listen to the day-traders, instead building a solid company over a span of years.

And if the shareholders don't like that, then they should invest in lottery tickets, not companies who actually make useful things.

Re:"vocal investor" vs "corporate raider" (3, Insightful)

rachit (163465) | more than 5 years ago | (#27128633)

That depends strongly on what time horizon you evaluate the shareholder perspective. Your average shareholder would like nothing more than for management to operate the company like a big pump-n-dump machine, jacking up the stock price for the next two quarters at the expense of long-term profitability. If management's doing its job correctly, it won't listen to the day-traders, instead building a solid company over a span of years.

I never understood this argument. Fraud aside, you shouldn't be able to jack the stock price without increasing profitability long-term or the promise of liquidation at a higher price in the near term.

Dumb investors that cause the temporary rise in price by short-sightedness should eventually go broke.

Re:"vocal investor" vs "corporate raider" (1)

Mr. Underbridge (666784) | more than 5 years ago | (#27129663)

I never understood this argument. Fraud aside, you shouldn't be able to jack the stock price without increasing profitability long-term or the promise of liquidation at a higher price in the near term.

I agree you shouldn't be able to, but you absolutely can. It's way too easy to put lipstick on quarterly reports to make them look better than they are. It's hard to tell if cost cutting is good, or something that will hurt the company long-term. Problem is, shareholders don't have the insight into a company's operations like insiders do, so it's easy to play games.

So a company can do things like cutting any costs that won't provide immediate impact on this quarter. Example: easiest way to pit short term vs. long term is to cut R&D funding. Your next couple of quarters - even years - will look fantastic. After that? Not so much.

Dumb investors that cause the temporary rise in price by short-sightedness should eventually go broke.

That's not necessarily fair if the investors were duped, which is easy to do. I agree the day-traders deserve to lose it, but they also tend to bring down 'buy-n-hold' investors who didn't know that they way that management increased profitability was by bleeding the company dry. It's not easy to always tell from quarterly reports.

because the market is highly inefficient (1)

Trepidity (597) | more than 5 years ago | (#27130071)

What you say would be true if stocks were valued according to expected long-term return, but they aren't. They're primarily valued circularly: based on expected value in the next 3-12 months.

Re:"vocal investor" vs "corporate raider" (1)

Hognoxious (631665) | more than 5 years ago | (#27132165)

Fraud aside, you shouldn't be able to jack the stock price without increasing profitability long-term

Of course you can, by increasing short term profits. Two ways to do that: cut R & D, cut quality.

Dumb investors that cause the temporary rise in price by short-sightedness should eventually go broke.

It doesn't work like that. They sell out and move on to another company, leaving the long term losses & the mess to someone else.

Re:"vocal investor" vs "corporate raider" (0)

Anonymous Coward | more than 5 years ago | (#27128259)

Haven't the stockholders already bought the company?

Re:"vocal investor" vs "corporate raider" (1)

david@ecsd.com (45841) | more than 5 years ago | (#27128323)

I must congratulate the P.R. team behind Icahn. The press keeps calling him "activist investor" when "corporate raider" would be a far more appropriate term...

You spelled "douche bag" wrong.

proper compensation (1)

Roadkills-R-Us (122219) | more than 5 years ago | (#27142955)

There are some people (not to mention any names), including some iconic people, who need to be dumped into the wilderness wit nothing but a pair of briefs and a knife, to find out what it's really like when the wolves get ahold of the little guy.

The Court of Chancery? (0)

Anonymous Coward | more than 5 years ago | (#27127793)

On such an afternoon, if ever, the Lord High Chancellor ought to be sitting here - as here he is - with a foggy glory round his head, softly fenced in with crimson cloth and curtains, addressed by a large advocate with great whiskers, a little voice, and an interminable brief, and outwardly directing his contemplation to the lantern in the roof, where he can see nothing but fog. On such an afternoon some score of members of the High Court of Chancery bar ought to be - as here they are - mistily engaged in one of the ten thousand stages of an endless cause, tripping one another up on slippery precedents, groping knee-deep in technicalities, running their goat-hair and horse-hair warded heads against walls of words and making a pretence of equity with serious faces, as players might. On such an afternoon the various solicitors in the cause, some two or three of whom have inherited it from their fathers, who made a fortune by it, ought to be - as are they not? - ranged in a line, in a long matted well (but you might look in vain for truth at the bottom of it) between the registrar's red table and the silk gowns, with bills, cross-bills, answers, rejoinders, injunctions, affidavits, issues, references to masters, masters' reports, mountains of costly nonsense, piled before them. Well may the court be dim, with wasting candles here and there; well may the fog hang heavy in it, as if it would never get out; well may the stained-glass windows lose their colour and admit no light of day into the place; well may the uninitiated from the streets, who peep in through the glass panes in the door, be deterred from entrance by its owlish aspect and by the drawl, languidly echoing to the roof from the padded dais where the Lord High Chancellor looks into the lantern that has no light in it and where the attendant wigs are all stuck in a fog-bank! This is the Court of Chancery, which has its decaying houses and its blighted lands in every shire, which has its worn-out lunatic in every madhouse and its dead in every churchyard, which has its ruined suitor with his slipshod heels and threadbare dress borrowing and begging through the round of every man's acquaintance, which gives to monied might the means abundantly of wearying out the right, which so exhausts finances, patience, courage, hope, so overthrows the brain and breaks the heart, that there is not an honourable man among its practitioners who would not give - who does not often give - the warning, "Suffer any wrong that can be done you rather than come here!"

How's that working out for Delaware?

MOTS (4, Insightful)

sohp (22984) | more than 5 years ago | (#27127901)

Again the execs with million-dollar buyout packages and short-term traders will scrape a few more crumbs into their fat mouths off the already nearly-empty plates of the ordinary folks who actually make the company go.

s

Judge works for profitability of investment grps? (2, Interesting)

Keith_Beef (166050) | more than 5 years ago | (#27133891)

If I've understood, and this is not necessarily the case, I admit, the judge has just decided that he is authorized to modify contracts in order to give financial benefit to particular groups of investors. He is effectively interfering in the market. Is that his job?

Let's imagine that I enter into an employment contract with a company, and this contract says that in certain circumstances I can leave and get a payout (let's say 12 months salary).

This payout is to compensate me for the time it will take for me to find another job. The cost and risk in known up front to both parties; the company and me. The contract is signed by authorised signatories of the company, who get this authorisation from the directors, who ultimately are authorised by the shareholders to make decisions about hiring and compensation policy.

Now along comes a judge, who says "I think that this contract is detrimental to the share price, ergo detrimental to the finances of certain shareholders; I have decided to unilaterally modify or annul this contract as I see fit".

The judge is appointing himself to be a kind of super-president of the company: not elected to the board by shareholders, but with some kind of moral right to interfere in the company's policies and practises.

Please feel free to correct me if I've got hold of the wrong end of the stick, but from reading TFA, that is my interpretation.

K.

Re:Judge works for profitability of investment grp (1)

whizzter (592586) | more than 5 years ago | (#27154341)

I think the argument for this would be that since the shareholders did fire the board that made the deal the judge considers the act of signing the contract something done agains't the will of the owners/shareholders and has taken it upon himself to reverse this.

Think of it in another way, what if the CEO/Chairman of a listed company would transfer all the funds of that company into his own account. He did have authority to access the accounts, but the act itself would certainly be considered theft.

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